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Feronia posts FY revenue increase of 91%, palm oil production up 61%

Africa-focused farming and oil palm plantation company Feronia (CVE:FRN) narrowed its full year losses in 2011, as revenue grew 91 percent on improvement in crude palm oil production and higher prices.

For the period that ended December 31, 2011, revenues grew to $7.45 million from $3.91 million a year earlier.

The company narrowed its net loss to $5.7 million or four cents per share, compared to a loss of $6.87 million or nine cents per share in 2010.

Feronia said crude palm oil (CPO) production was up 61 percent to 7,981 tonnes for the full year, up from 4,951 tonnes in 2010.

A total of 12,110 hectares (ha) of oil palms were replanted during the year. The company also reported that realized average sales price for CPO was $984 per tonne in 2011, up from $746 per tonne a year earlier.

"In 2011, Feronia accomplished several key objectives," said Feronia CEO Bill Dry.

"We raised new equity which allowed the company to accelerate its re-planting program and advance the construction of a new palm oil mill at Yaligimba plantation.

"We completed the re-planting of 2,110 ha of oil palm, exceeding our 2,000 ha target. With our existing palms, we increased realized yields and oil extraction ratios, resulting in a 61 percent increase in CPO production.

"In our arable farming division, we succeeded in getting all required inputs and machinery into the country, commenced construction of our drying, storage and processing facilities, and sowed 1,200 hectares of rice, the largest single sowing in the history of the DRC."

Feronia said it achieved gross margin of 45 per cent for the year, compared to 40 percent in 2010. As at December 31, the company had $13.5 million in cash, and no debt.

In Feronia's palm oil division, fresh fruit bunch (FFB) average yield increased to 3.66 tonnes per ha, from 2.28 tonnes per ha in 2010.

The company's oil-extraction rate (OER) increased to 17.1 percent from 16.3 percent in 2010.

Feronia said that in 2011, it began the first application of fertilizer to oil palms aged between four and 16 years, with 821 ha covered to date, and noted 880 ha of oil palms were replanted so far in 2012.

The company also reported Tuesday that the first stage of civil work was completed for its new palm oil mill at Yaligimba, in the Democratic Republic of the Congo (NYSE:DRC). The palm oil mill, which is being commissioned in the fourth quarter at the Yaligimba plantation, is expected to have an initial processing capacity of 30 tonnes per hour of FFB.

The capacity is expected to be increased to 60 tonnes per hour in a phase two expansion, which will be implemented as the mill approaches full capacity utilization.

Under its arable farming division, the company noted that its first commercial rice crop of 1,200 ha was sown in October and November 2011. Feronia said that while the harvest in February 2012 produced yields of up to 2.3 tonnes of paddy per ha on the early sown fields, a delay in planting and atypical adverse climate conditions resulted in only minimal yields.

In February 2012, 300 ha of rice were planted and it expects to harvest this crop in May 2012.

Looking ahead, Feronia said it plans to complete several capital investments in 2012.

Once commissioned, the new Yaligimba mill is expected to allow an "immediate and material" increase in CPO and revenue contribution from the Yaligimba plantation.

"We anticipate further incremental improvements from existing areas," said Feronia executive chairman Ravi Sood.

"The Yaligimba mill is scheduled to be commissioned in the fourth quarter of 2012 and once this occurs, the company expects to have substantial excess processing capacity which it plans to leverage in coming years through new plantings.

"In 2012, the company's arable farming group expects to complete and commission its rice mill and additional drying and storage capacity. Management will be focused on improving yields at the arable farming operation and completing the division's first commercial sales."

Feronia said that key objectives in 2012 include completing up to 5,000 ha of re-planting across its oil palm plantations, and proving commercial yields of rice and beans at its arable farming division.

The company's focus is on its arable farming operations and oil palm operations in the DRC, Africa. It employs Brazilian and US-style agriculture systems at its arable operations for the greatest efficiency and economies of scale.

Feronia's shares were trading at 29 cents on Tuesday afternoon.